Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Christopher Glynn - Oppenheimer & Co.
Christopher Glynn - Oppenheimer & Co.
Start with just a question on the Barnes distribution in Europe. Greg, you mentioned the cost structure there. Just wondering now how much of what's being experienced now is more related to volumes versus still not being where you want to be on the operations.
Gregory F. Milzcik
I think that we made some very significant progress over the past nine months. One of the interesting points was we actually made operating profit in September and I recognize that one point in time does not make a trend so we are looking to see some improvement going forward. A lot of that had to do with volume.
We had an improvement in volume in September and as we go into 2010 we are confident with the things we've done up to this point continuing to refine our operations and with some volume improvement we will be able to turn the corner on that business, long term.
Christopher Glynn - Oppenheimer & Co.
Moving over to aerospace, a couple of questions there. Comments in the press release on activity made picking up the second half of 2010, can you parse those comments on the aftermarket versus the OE?
Gregory F. Milzcik
I think there are two things that are driving it. One is if you look at the data coming out of the third quarter, and September in particular, while it's a mixed bag, there is certainly some improvement in everything from load factors to the health of the airlines around the world. Asia continues to grow, etc. So that's one of the key driving factors behind our thought process.
When we examined the post-9/11 results of deferred maintenance and then we overlaid that on the current environment, I think that the third and fourth quarters of next year will certainly see a pop in the maintenance, repair, and overhaul activity. At least that's our outlook currently.
When we look at the OE market, while many people are looking at 2011 and 2012 as being recovery of actual production of aircraft, since we precede aircraft deliveries by six to nine months and the 787 ramp up we're building in that equivalent and that assumes that the 787 will fly sometime within the next several months, even if it's not year end, close to year end. So we think that late in, or at least in the back half of the year we will start to see orders, as well as deliveries, pick up late in 2010.
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